Welcome back. A blowout quarter for Chevron with record earnings, record U.S. production, faster than expected integration with Hess, new deal with Microsoft to power a data center in Texas. Joining me now, Chairman and CEO of Chevron, Mike Wirth. Mike, great to have you. Thank you so much for joining us.
You're welcome. Great to be with you.
Incredible quarter. Net income more than six dollars a share, company's highest quarterly profit in at least six years. Revenue 70.1 billion dollars, up 56% from a year ago. Can you give us the main takeaways of the quarter, what we should understand best about what took place in the last three months?
The story of the quarter, one of consistent execution. Strong production, record U.S. refinery throughput. We had assets around the world run at or near full capacity. Set production record in the U.S., nearly 2.1 million barrels oil equivalent per day. Record refinery runs greater than a million barrels a day, all-time high here in the U.S. Several refineries set all-time records. All of that critically important given the time the world energy system has been in. The need for supplies to markets, customers has never been higher. I am really proud of our people in the quarter. They delivered.
Congratulations. You have been investing in this period. One highlight was much higher oil prices, and Mike, that is because of this war in Iran. I want your take on that, because the last time we spoke, there were serious worries about security, about ships transporting through the Strait of Hormuz. What can you tell us as war has escalated once again?
Well, start with your comment about growth. Our production was up 20% year-on-year, 5% just since the first quarter. Our second quarter, we've been investing to grow production, bring energy to the market. The issues associated with conflict in the strait continue, and there are developments each and every day. We now see not only the Strait of Hormuz but the Red Sea, the Black Sea have risks and uncertainties. Some challenges are expanding, and the risks to supply are very real. We've seen demand in the world remain pretty strong. China is perhaps the unexpected part of the story in that they've been able to reduce crude inventories, push demand off the supply equation as supply had challenges and risks. Strategic reserves in Venezuela have been drawn down, commercial stocks, and the situation remains somewhat fragile, uncertain.
Has the Iran conflict changed how you view geopolitical risks, energy security at this point, Mike? We are worried about shipping being shut down for refined products.
Our thinking is evolving. We have seen things like that over the past. I have been in this industry for 44 years. We've seen conflicts in the Middle East, we've seen conflicts in other parts of the world that have created issues for our industry. The industry responds. In short, permanent rerouting of supplies. And I think the industry has done well. The United States has been a big part, the biggest producer in the world, biggest exporter now, to meet the needs of our allies around the world. The U.S. stepped up to be part of the answer here. Longer term, I think you will see some changes in the system. We are in discussions with Iraq about potentially entering one or two oil fields there. Part of those discussions would include a framework that would allow the construction of a pipeline that would go north and move to the Mediterranean Sea and create a pathway for production to get to market that would not have to go through the route today, which is through the Strait of Hormuz. And so I think you will see changes in the energy system. It is a little early to say what all of them are as we deal with what is still an evolving set of circumstances.
Thank you for that. The Houthis involved attacking assets near the Red Sea. You've got Egypt. So Mike, what can you tell us about infrastructure that has been hit as a result of this war? Is there any reason to believe that it is going to take longer and longer to get that infrastructure back in place?
Depends on particular circumstances. In some cases, hits on easily fixed piping or containment. In other instances, if it's sophisticated processing, it takes more specialized manufacturing to replace that. The lead times can be months or years in some cases. I think the unfortunate thing is energy assets targeted in this conflict degrades capacity of the energy system to meet global demand. How quickly that comes back will be one of the things that determines when markets get back to some sort of new equilibrium.
You said you would expect oil prices elevated for some time.
We've seen supply constrained, damage to infrastructure. We have new risks that will be priced into the market. On shipping, for instance, so shipping rates, shipping insurance, the willingness of shipowners to go to certain ports in the world, is likely to remain a question for some time to come. As I mentioned earlier, inventories around the world drawn down, buffers that allowed markets not to tighten the way some feared are greatly diminished. Risks continue to present themselves. So I think what that creates is a situation with price pressure, more upside than downside. So I do believe we are going to see circumstances keep that pressure in place here for a time to come.
The quarter, a blowout quarter. Your company's execution, it is also the one-year anniversary since you closed the Hess transaction. You said 50% more synergies, one and a half billion dollars in synergies. Tell me what the Hess acquisition has done, given the importance of Guyana, the facilities, the opportunity that you are in right now.
Headline on Hess looks like a good transaction at the time we did it. It looks even better today. The integration strengthened our portfolio. We have accelerated financial delivery with 50% more synergies, six months earlier than expected, a billion and a half dollars rather than a billion, midyear 2026 rather than end of year 2026. Strong free cash flow, roughly doubled. Incremental dividend, the cost is in the unified shares. The company is dividend-paying on that share. Shares are only half the expected dilution. The transaction has been accretive on a per share basis. Free cash flow bigger, stronger portfolio enhances and extends growth into the 2030s. Perhaps most importantly, tremendous talent added to the workforce. The people that have joined us from Hess are already making a significant contribution. Strengthened our workforce tremendously.
What can you tell us about the future, how sustainable very strong numbers are? What are you expecting second half of the year? Also production, analysts want to know if you are going to be able to keep up this very strong production second half of the year.
We've guided to do 7 to 10% production growth for the full year. That guidance remained intact. We are seeing strong underlying performance in businesses around the world and have every reason to believe we will deliver that. That is on top of growth last year and the year before, so we feel very good about that. The reason is the quarter was not the function of some unique set of factors in the quarter. We have been building a stronger portfolio through the last decade. A decade ago, a little bit more than that, our production in the Permian Basin was a hundred thousand barrels a day. Today in the Permian, greater than a million barrels a day. A few years ago in the Gulf of Mexico, less than 200,000 a day. Today, well over 300,000 a day. We added in Kazakhstan 400,000 a day. In Canada, the DJ Basin is there. Built a portfolio, particularly in the United States of America, that is stronger, producing at higher levels today, and will continue to do so long into the future. We've got a guide to 10% annual free cash flow growth over the years 2026 through 2030. So through the end of the decade, we've got underlying business improving, production growth that will deliver value for shareholders. Most importantly, more energy for markets and consumers.
